Real estate lobby urges Government to retain negative gearing

In its pre-budget submission, the Real Estate Institute of Australia (REIA) has urged the Government to retain negative gearing to encourage property investment and place downward pressure on rents.

REIA chief executive Amanda Lynch says the evidence is clear that both negative gearing and the capital gains tax discount is crucial to feed the supply-side pipeline at a time of a chronic under-supply of houses in Australia.

“Any alteration to the current arrangements would likely result in a need for a greater investment by the Government in social housing and could potentially increase rents - as recognised by the Henry Tax Review in 2010, which stated that the current provisions placed downward pressure on rents,” she said.

The REIA’s Pre-Budget Submission highlights eight recommendations aimed at contributing to Australia’s continuing economic development and productivity while attracting first home buyers back into the property market and improving housing affordability.

Meanwhile, Eddie Chung, partner at BDO, recently told Your Investment Property that there is a lot of passion on both sides of the negative gearing debate.

"In particular, the opponents to negative gearing argue that negative gearing encourages property investment by providing signficant tax perks that drive up housing prices, which makes home ownership inaccessable, especially to first home buyers.

Look out for Eddie's article on 'The absolute beginner's guide to Negative Gearing' in the March issue of Your Investment Property on sale the 19th of February.

My god, imagine investors lowering rents..... Geez..... That's going to happen! Lol!!! Get real, such hypocrites, let us have incentives, while at the same time saying that under supply will be made to oversupply and drive down values and rents for investors....haha, shooting yourselves in the foot, so I. Reality it's a lie. Investors are screwing up the market as well as govt foreign investment rules.

Don't forget, your children will be living with this mess your making.

Gregory says on
13/02/2015 10:08:19 AM

As a landlord and ex-tenant, I see both sides of the fence and things could be fairer. Limiting negative gearing to new House/Unit purchases "going forward of course", would be a great benefit to increasing housing stocks and therefore keeping rents reasonable. Fact is investors buying established properties drive up rents and property prices.If we do what I suggest an investor selling their new property would more likely sell it to a owner occupier because the sale would extinguish the negative gearing. This would take most investors out of the mix for buying established and make prices more reasonable to the next owner.Importantly if the landlord dies, there should be prevision that negative gearing for that property passes onto the beneficiary/s of the Will. The property might get sold anyway, but we want to do something that minimises tenants getting tossed out into the street just because the landlord dies.

So this would encourage investors to keep new property long term and encourage growth in new housing stocks.

Those two things alone has to be a good thing for Australian home ownership and rents?

Peter says on
13/02/2015 04:49:17 PM

FIRST YOU ARE FORCED OUT OF BUYING A HOME AND THEN YOU HAVE TO PAY HIGHER TAXES TO SUPPORT THE PERSON WHO BOUGHT THE HOME THAT SHOULD HAVE BEEN YOURS!!

I am an investor whose sole income is from property.

I have always been opposed to negative gearing because it make homes more expensive for home buyers (including first, second, third and more home buyers).

It is simply unfair for higher income earners (who are more highly taxed because they have higher incomes) to be given the privilege of writing off some or all of their tax when they buy a property at the expense of home-buyers who are subsequently prevented from buying properties that negatively geared higher income earners can pay more for due to using their privilege of negative gearing.

Not only are property prices made higher by giving higher income earners the privilege of negative gearing (and the higher the income the higher the privilege) but the Federal Government loses about $4 billion each year in taxes that negatively geared property owners do not have to pay. The suffering first home buyer and other people who are not negatively geared then have to pay an extra $4 BILLION IN TAX because of the privilege given to negatively geared high income earners.

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